Case Law Details
Xerox India Ltd. Vs DCIT (ITAT Delhi)
Conclusion: Expenditure incurred on Advertisement, Marketing and Promotion (AMP) for creating market intangibles including brand value in favour of Associated Enterprises was not considered as an international transaction as mere use of brand name or logo owned by the AEs by assessee would not automatically lead to influence that any expenses that assessee incurred towards AMP was only to enhance the brand and there was no cogent material to treat the incurring of AMP expenses as international transactions.
Held: Assessee-company was engaged in the business of trading of Xerographic Equipments, Printers, Scanners, Faxes, Multi-functional Devises, High-end printing equipment etc. AO noticed various international transactions carried out by assessee and referred the matter for determination of the Arms’ Length Price of the transactions to the Transfer Pricing Officer (‘TPO’). TPO though did not make any adjustment to the amount of the international transactions reported by assessee, however, proposed an adjustment on account of international transaction, namely, “Creation of Marketing Intangible including brand value in favour of the AE” arising out of the advertisement and marketing promotion (AMP). TPO determined the adjustment of Rs.14,46,58,620/- . Consequently, AO included transfer pricing adjustment in the assessment order. It was held there was not an iota of material on the file apart from relying upon the fact that by incurring huge AMP expenses, assessee had enhanced brand value and created intangibles in favour of its AE, no cogent material was there to treat the incurring of AMP expenses as international transactions. Also, the question of existence of international transaction of AMP and adjustment on account of the same in the case of assessee had been deleted in the assessment year 2008-09 and 2010-11, thus, respectfully following the finding of the Tribunal in earlier assessment years, it was concluded that no international transaction of AMP exist in the case of assessee. Hence, the adjustment was deleted on account of the AMP transaction
FULL TEXT OF THE ITAT JUDGEMENT
These cross appeals by the assessee and the Revenue are directed against final assessment order dated 30.12.2015 passed by the learned Deputy Commissioner of Income Tax, Circle-27(2), New Delhi (in short ‘the Assessing Officer’) pursuant to the direction of the learned Dispute Resolution Panel (in short ‘learned DRP’) dated 18.11.2015. The grounds raised by the assessee and the Revenue are reproduced as under:
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